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Enter Nazis. Unable to compete abroad, the German business class cried weakly for a directing savior. In their happiest times they had always had one. The immediately pre-Hitler years were the years of the phenomenon of "tired capitalism"; the German cartelized business structure, which was inextricably merged with five big banks, did not know the rules of intramural competition. Then came the first Nazi experiments with a rigidly controlled system, with businessmen retained as managers in their own plants, but with the Government allocating raw materials, dictating wages and prices and limiting and forcing new investment in accordance with Nazi conceptions of national welfare. Capital surpluses went into armaments; the Nazis ceased to build houses. The peasant was bound to his land by laws prohibiting the sale or mortgaging of hereditary homesteads, and farm production was indirectly managed through price-fixing boards. The great drive of Wehrwirtschaft, or war economy, was on.
During the World War Walther Rathenau, industrialist and economist, had taken hold of the German economic machine and coordinated it after the fashion of Bernard M. Baruch's later U. S. War Industries Board. A Jew, Rathenau was assassinated after the War by antiSemitic, anti-liberal nationalists. But Rathenau's secret dream of a completely rationalized and goosestep-clicking German industry was remembered by some of his young disciples who became Nazis. Hitler's first and second Four-year plans for making Germany self-sufficient owe more to Rathenau's social thinking than any Nazi would dare to admit.
Schacht to Funk. Even before Hitler the Germans had been forced to experiment with foreign exchange control. With exports falling in 1933, Hjalmar Horace Greeley Schacht, head of the Nazified Reichsbank, first prohibited the transfer of interest on German foreign debts and then evolved a system of control boards to balance imports and exports. Out of these equilibrist schemes grew the blocked currency accounts and the barter devices, with the Germans paying foreign exporters in special marks good only for German goods at a price lower than the internal price level. Boycotts and currency difficulties kept lopping off chunks of normal German trade with England, the U. S., and Soviet Russia, but export subsidies to the extent of 30% of the value of all German exports enabled Nazi businessmen to quote speciously attractive prices to the Balkans and South America, regions with surpluses of grain, tobacco, oil, cotton, coffee and cocoa. Between debtor nations the system of subsidized barter might have worked satisfactorily enough, but the Nazis themselves were slow to deliver finished goods in return for foodstuffs and raw materials, and they frequently demoralized world markets for their suppliers by reselling coffee, tobacco, cotton, etc., at knock-down prices in order to get needed foreign exchange.